Preface
As the most important currency in the world, the US dollar is mostly used in international trade, and SWIFT is the US dollar settlement system established by the United States.
At the beginning of April 2024, Yellen's visit to China has just ended, and at the end of April, another senior official from the United States, Blinken Blinken, has been announced, and this time the two sides will discuss according to the field of bank settlement, and the United States has announced that it will impose financial sanctions on China.
Yellen has just left on the front foot and just discussed the need to jointly face the international situation, and Blinken's visit to China on the back foot is aimed at kicking China out of the dollar settlement system? What is the purpose of this move by the United States?
1. Iran and Russia were kicked out of SWIFT
After Iran was kicked out in 2012, the value of goods depreciated by nearly 38 percent in one year.
Because it is excluded from the system, Iran's trade with other countries can only take the form of third-party cross-border transactions, which requires the transfer of goods funds between different countries, and the goods funds need to reach the final bank for clearing.
Compared with the original direct transaction with US dollars, it is a lot more troublesome, and if you go to trouble a third party, the third party will definitely have to charge a sum of money, a very simple example, I need to trouble a person to do something, and only that person can help, if that person is not familiar with you, how can it be for no reason to help?
The U.S. kicked Iran out of SWIFT, but the U.S. clearing system had to be used in the final settlement, so the Iranian currency depreciated sharply in a year, and cross-border transactions fell into recession, which was badly affected.
In fact, Russia has not been affected too much, and Russia's use of the Rwanda currency and the renminbi to promote trade is also going on as usual.
In addition, the international status of the renminbi has been continuously improved in recent years, whether it is to buy oil and gas resources in Russia, or to buy in Brazil and ASEAN, the use of the renminbi is supported.
The original intention of the United States to kick Russia out in 2021 must have been to think that they would be like Iran in economic collapse, and then take this opportunity to support Ukraine and deal with China.
After all, in the eyes of the United States, if one competitor is defeated, the other competitor will not last long, but it originally wanted to hit China, but later found that the spearhead was directed at itself.
Things did not go as the United States expected, and although Russia was somewhat curbed on some trade, it did not have much impact.
Trump has said that the dollar will soon no longer be the standard of the world, but Biden does not listen, he is bent on reducing his dependence on China, has Biden ever thought that the EU region does not want to?
This time Secretary of State Blinken visited China, nine times out of ten, he was also thinking about how to kick China out of SWIFT, it was not enough to cut Japan, and now he is thinking about cutting China, if China is really kicked out, will the United States meet expectations?
2. What will happen if China is kicked out of the system?
According to Xinhua News Agency, as of April 24, the dollar hit a 34-year record against the yen, and in 2022 alone, it fell by more than 30% in ten months.
Mainly because during the new crown epidemic, the Federal Reserve first released money, and then began to raise interest rates on inflation, and Japan, as the country with the most U.S. debt, was naturally affected.
Now China is selling off U.S. bonds, but Japan, the United Kingdom's U.S. bond holdings are on the rise, and everyone thinks that Japan's economy is going to take off, just like Japan is going to develop, but all this is just a façade, and the yen is constantly depreciating.
The aggressive interest rate hike in the United States is the biggest reason for the depreciation of the yen, but Japan's over-reliance on exports, whether it is energy or food, has to rely on imports, even if the Fed cuts interest rates in the future, the phenomenon of the yen slowly depreciating will most likely not change.
And the depreciation of the yen has caused all the money to flow to the pockets of the United States, is it not enough to cut Japan, and now it is changing hands to China?
As the world's largest economy, the United States always wants to "control" various countries, and China, as the second largest economy, is the biggest "threat" in the eyes of the United States.
If you want to win the game, in addition to improving your own ability, it is not a good way to kill your opponent, and SWIFT in the United States can be said to have monopolized the channel of bank transfers for overseas transactions.
In addition, since the conflict between Russia and Ukraine, trade between China and Russia has not been broken, and not only that, but there are also some financial exchanges between the two sides, which is not good in the eyes of the United States.
If the United States wants to impose sanctions on Russia, it will not allow other countries to cooperate with Russia, and if it cooperates with Russia, it will also sanction this country, and China is this country.
Therefore, before Blinken's visit to China, Xinhua News Agency announced that it would impose financial sanctions on China, and it was in the field of bank settlement, so this is the only aspect that comes to mind.
Assuming that China really can't use the US dollar to trade in the future, then the first currency that China will use is the renminbi, and China's purchasing power as a major exporter is obvious to all in the world.
Japan, the United States of America many companies are also the largest exporters of China, plus China can make a lot of good products, such as drones, the world also needs.
We have to sell, we still have to buy, naturally do not worry about buyers and sellers, if the other side wants, will definitely use RMB, not only that, there is no RMB and gold.
Moreover, since the past few years, China has accelerated the process of "de-dollarization", although there is a saying in the world that China cannot do without the dollar, but only the United States really believes in this sentence and is convinced.
This time, Blinken came to China to negotiate, if he wants to seize China's handle, he will definitely use bank settlement, if the two sides collapse and China abandons the dollar, it will definitely be a historic moment.
This moment will bring economic turmoil, and at the same time, it may hit the world economy hard, after all, there are too many countries that cooperate with China, and it will affect all countries and the people of each country.
However, judging from the current situation in Russia, the United States will not easily let go of China's fat, after all, Yellen's visit to China in early April also wants China to buy a large number of US bonds.
As Trump said, a new world economic system may be quietly built, and everyone will be witnesses to history.
Primary sources
1. Beijing Daily client, 2024-04-24, U.S. Secretary of State Antony Blinken arrives in Shanghai
2. Finance Associated Press, 2024-04-24, Trump meets Taro Aso to point the finger at Japan: the depreciation of the yen is a disaster
3. Huanqiu.com 2023-04-15Trump: The dollar will soon cease to be the "world standard", which will be the biggest failure of the United States in 200 years
4.China News NetworkApril 23, 2024The United States is considering imposing sanctions on Chinese financial institutions and other entities?